Stock to Buy: Textile that can deliver 54% returns after strong Q3 performance

Synopsis: Raymond Lifestyle shares gained attention after strong Q3 results and MOSL’s 54 percent upside call, driven by domestic-led recovery, margin expansion, and steady segmental growth.

The shares of this company, which is involved in branded apparel, suiting, shirting, garmenting, and retail, with being one of the largest vertically integrated manufacturers of worsted suiting fabric worldwide, gained investor traction after MOSL gave an upside of 52 percent and strong Q3 results

With a market capitalization of Rs 5,635 crore, Raymond Lifestyle Ltd’s shares closed at Rs 925  per share, up by 0.68 percent from its previous day’s close price of Rs 918.75 per share. The share has given a neagtive returne 66 percent since its listing in September 2024.

Brokerage Views

Target: the brokerage after the company gave healthy third-quarter earnings, maintained its target of Rs 1,425 per share, an upside of 55.2 percent from its Thursday’s closing price.

Domestic-Led Recovery: Profitability is rebounding as operating leverage improves, supported by better cost efficiencies and a favourable business mix. Higher capacity utilisation and disciplined expenses are translating into stronger margins. 

This recovery is being led by robust performance in the domestic market, where healthy demand and volume growth are driving revenues and sustaining earnings momentum.

Earning multiple improvements expected: Revenue is expected to cross FY24 levels by FY26, reflecting steady growth in the business. Over the period from FY25 to FY28, the company is likely to see an average annual revenue growth of around 8 percent, indicating healthy and consistent expansion.

EBITDA margins are also set to improve, gradually reaching 12 to 14 percent by FY28. This margin expansion highlights better operational efficiency and the company’s ability to convert higher revenues into stronger profitability over the medium term.

Results Highlights & Segmental Performance in Q3 FY26

In Q3 FY26, the company posted a total income of Rs 1,883 crore, marking a 5 percent YoY growth from Rs 1,796 crore. EBITDA jumped 23 percent YoY to Rs 271 crore, with margins improving to 14.4 percent from 12.3 percent, supported by strong domestic market volumes, highlighting a steady recovery and robust operational performance.

The Branded Textile segment grew 11 percent YoY to Rs 951 crore, driven by higher volumes, festive and wedding demand, and stronger consumer awareness. EBITDA jumped 35 percent to Rs 207 crore, with margins improving to 21.8 percent due to a better product mix. Branded Apparel grew 5 percent to Rs 482 crore, though margins dipped to 7.3 percent from higher marketing spends and new store ramp-up.

The Garmenting segment saw a decline of 17 percent YoY to Rs 258 crore, affected by US tariff uncertainties. EBITDA dropped to Rs 11 crore, with margins falling to 4.2 percent, reflecting scale pressure. Despite challenges, the company is closely monitoring international trade developments while focusing on operational efficiency to limit margin impact.

High-value cotton shirting revenue grew slightly by 2 percent YoY to Rs 205 crore, aided by a better product mix, with EBITDA rising to Rs 23 crore and margins at 11.1 percent. Raymond Lifestyle ended Q3 FY26 with a low net debt of Rs 15 crore, maintaining a healthy balance sheet to support future growth and expansion.

Incorporated in 2024, Raymond Lifestyle Ltd operates as a premier garmenting, suiting, and apparel business, offering high-fashion, premium, and value-focused products through extensive retail, EBOs, and online channels. With a brand portfolio that includes iconic brands like Raymond Ready to Wear (RRTW), Park Avenue (PA), ColorPlus (CP), Parx, and Ethnix.

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